How fair are your Enterprise Agreements

How fair are your Enterprise Agreements?

South Australia is set to make some major changes to retail penalty rates.  In March this year, Business SA and the Shop Distributive and Allied Employees’ Association reached a voluntary template enterprise agreement removing Saturday and evening weekday penalty rates for retail workers. Sunday penalty rates are reduced from double‐time to time‐and‐a‐half, while the penalty rates for public holidays will go from double‐time‐and‐half to double‐time only.[1]

Under the General Retail Industry Award 2010, an adult retail assistant working on a permanent basis on a Sunday could expect a minimum of $37.05 per hour,[2] however, under the new agreement, this would fall to $30. In order to compensate for this loss, the base rate of pay will increase from $18.52 to $20.[3]

Enterprise Agreements

Enterprise Agreements cover a range of terms and conditions between employers and employees, including rates of pay. For an agreement to be accepted by the Fair Work Commission, it must pass the ‘better off overall test’.  This requires that each employee who would otherwise be covered by the award will not be put in a disadvantageous position, were the proposed enterprise agreement applied instead. This test is an overall assessment, as per Re Armacell Australia,[4] so although some terms may be worse for the employee, other terms will be better in order to compensate.[5]  For example, under the proposed agreement, despite penalty rates being lowered, an employee may still be considered “better off overall”.

Effect on Retail Employees

Many employees in retail, particularly students and other part time workers, rely on the extra weekend pay as they are unable to work other hours. For example, retail assistants who only work on Saturdays may be disadvantaged even with the introduction of increased wages during weekdays.

In Re The Andrew Crawford Group, the Commission found that increasing wages during the week to compensate for lower weekend wages did not meet the “better off overall” test, given the vast majority of the work (crowd control) occurred on Thursday to Sunday and often on public holidays.[6]

In this case, the whole class of “crowd controllers” was considered to be worse off under the agreement, whereas retail workers tend to select weekend work due to personal circumstances or time constraints. However, this could still be a ground for the Commission to reject these types of retail enterprise agreements.

Summary

The template enterprise agreement might allow employers to reduce costs in order to open on weekends, however, it may not leave employees satisfied.  It is also possible that the Fair Work Commission could reject these types of enterprise agreements for not adequately compensating employees, so employers should be careful in considering the terms. Despite this, the proposed enterprise agreement template may be able to assist business owners in better meeting the expectations of consumers by opening on weekends and for longer hours.

Sources:

[1] ‘Saturday penalty rates scrapped under landmark South Australian deal’, ABC News (online), 24 March 2015 < http://www.abc.net.au/news/2015‐03‐24/template‐enterprise‐agreement‐retail‐sector‐south‐ australia/6342712>.

[2] Fair Work Ombudsman, Pay Guide for the General Retail Industry Award 2010, 24 June 2014.

[3] Ewin Hannan, ‘SA penalty rate deal no champagne moment for employers’, Financial Review (online), 28 March 2015 <http://www.afr.com/news/policy/industrial‐relations/sa‐penalty‐rate‐deal‐no‐champagne‐ moment‐for‐employers‐20150327‐1m7d4i>.

[4] Re Armacell Australia (2010) 202 IR 38 [11]‐[19].

[5] Ibid. [41].

[6] Re The Andrew Crawford Group Pty Ltd T/A Crawford Group Security and Investigations [2013] FWC 5858.